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Federal Court Dismisses Civil Theft Claim Against Corporate Trustee

September 26, 2013

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Plaintiffs are becoming more creative in the claims they bring against fiduciaries.  So, too, are the fiduciaries when they get sued.   In two opinions in Berlinger v. Wells Fargo Bank, N.A., here and here (links via Justia), a federal court in Florida dismissed some claims brought against a corporate trustee while allowing some of the corporate trustee’s claims against its individual co-trustee to go forward.

When Do You Actually Become A Party To Probate Court Proceedings? And Why Does It Matter?

September 24, 2013

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It seems like a simple question: when does a person become a party to probate court proceedings?  Under Georgia law, however, the answer may not be that simple.

Take the case of In re: Estate of Billy Rogers, where the decedent’s mother and cousin filed an objection to the appointment of the decedent’s wife as the temporary administrator of the estate.  When it came to their appeal of the probate court order granting the wife permanent letters of administration, however, the trial court decided that the mother and cousin were not parties to the probate court proceedings for purposes of the appeal of that order.  The Georgia Court of Appeals reversed, but let’s see where the problem arose.

IRS Releases Inflation-Adjusted Figures for 2014

The IRS this week released inflation-adjusted numbers for 2014 for several transfer tax items.  These include the following:

  • The unified credit and gift tax exclusion amount will increase in 2014 from $5,250,000 to $5,340,000
  • The generation-skipping transfer tax exemption will also increase in 2014 from $5,250,000 to $5,340,000
  • The gift tax annual exclusion will not increase–it will remain at $14,000
  • The gift tax annual exclusion for gifts to non-citizen spouses will increase from $143,000 to $145,000

Does Renunciation Rule Apply To Self-Settled Inter Vivos Trusts?

September 19, 2013

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We previously looked at the doctrine of election, where a party generally must renounce the benefits received from an estate (or trust?) before he or she can challenge the will (or trust?).  In Estate of Boyar, the Illinois Supreme Court sidestepped the question of whether the doctrine of election should be extended to challenges to amendments to living trusts in cases where the trust serves the same purpose as a will.

Where Illinois did not weigh in, a Florida appellate court did.

Georgia Self-Proving Affidavit Was Insufficient

September 17, 2013

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When a legislature goes through the trouble of giving you a statutory form, as the Georgia General Assembly has done with self-proving affidavits under O.C.G.A. § 53-4-24, why would you omit items from the statutory form?  In Martina v. Elrod, a will contest case, the caveators invalidated a self-proving affidavit because the self-proving affidavit was not in substantial compliance with the statutory requirements.  So, what was missing?

IRS Adopts State of Celebration Rule – If Valid Where Performed, You are Married for Federal Tax Purposes

Originally posted on

In Revenue Ruling 2013-17, the Internal Revenue Service provided clear guidance to define “spouse” for all purposes under the Internal Revenue Code. A “spouse” includes a same-sex spouse whose marriage is recognized by the state in which the marriage occurred. Use of this “state of celebration” rule will greatly simplify employee benefit plan administration for employers. However, the IRS indicated in this guidance that it will provide more direction on the impact of this definition on employee benefit plans.

How Did the IRS Define the State of Celebration Rule?

These are the bottom line holdings from the IRS guidance, which apply for all purposes under the Internal Revenue Code:

  • The terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a person of the same sex if the individuals are lawfully married under state law, and the term “marriage” includes

Missouri Court Opens the Door to Fiduciary Liability for Non-Trustees

September 12, 2013

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It is hard to imagine how Jean McClure could have breached a fiduciary duty to the Les Galey trust when she was not a trustee and never received any money from the trust.

According to the Missouri Court of Appeals in Brock v. McClure, the saga began when Les Galey died and left over $200,000 in trust for the benefit of his wife, Mary, with Lawrence McClure as the trustee.  After Mary’s death, Lawrence was to distribute four specific bequests totaling $40,000 and divide the remainder equally among Les Galey’s sisters, Bessie Brock and Jean McClure.  Mary Galey died on August 24, 2004.  When no distributions had been made after four years, Bessie Brock and her children sued Lawrence McClure for breach of fiduciary duty.  In addition, Brock named Lawrence’s mother Jean McClure as a defendant claiming that she had purported

Calculating Lost-Investment Interest Rates In Breach Of Fiduciary Duty Cases

September 10, 2013

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Calculating damages in breach of fiduciary duty cases can be tricky business.  The aggrieved trust beneficiary is going to make a claim that the trust assets should have (or would have but for the breach of duty) been invested in some high earning funds that beat the S&P, while the fiduciary is going to claim that a money market rate is the only reasonable measure of damages.  In In re Harry Inge Baker & Jeanne C. Baker Trust dated August 9, 1988, the Minnesota Court of Appeals gives us some guidance on bridging that gap.

Missouri Court Of Appeals Holds That Attorney-In-Fact Violated Fiduciary Duty

With research and drafting assistance from Washington University School of Law student, Kelsey DeLong.

In Estate of Lambur, the Missouri Court of Appeals addressed the issue of whether an attorney-in-fact is permitted to gift the principal’s property to herself when the gift is not expressly authorized in the power of attorney.

In 2005, Verna Irene Lambur (“Irene”) executed a durable power of attorney naming her nephew’s wife, Anna Stidham (“Anna”), and Jackie Johnson (“Jackie”) as her attorneys-in-fact.  The power of attorney granted Irene’s attorneys-in-fact the following power:

To establish, change or revoke survivorship rights in property or accounts, beneficiary designations for life insurance, IRA and other contracts and plans, and registrations in beneficiary form; to establish ownership of property or accounts in my name with others in joint tenancy with rights of survivorship and to exercise any right I have in joint property; to

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